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Lao Garment Industry Shrinks Amid Labour Shortage

Source: Vientiane Times

The local garment industry has contracted in the wake of labour shortages, the Association of the Lao Garment Industry has reported.

From 2003 to 2011, the garment industry expanded but since 2012 a downward trend has prevailed, the association’s President Dr Xaybandith Rasphone said at the group’s annual meeting in Vientiane on Friday.

“Labour shortage issues have caused new investors to lose interest in Laos, instead shifting their capital to neighbouring countries, especially Cambodia, Vietnam and Myanmar,” he said.

“The sector is also struggling with low labour skill issues as most workers have no experience and have to learn on the job, and many employees don’t want to take on responsibility,” Dr Xaybandith noted.

Large numbers of workers still have an easygoing mindset and are not attuned to modern industrial and technological ways of thinking.

Another reason for the shortfall in labour is that workers now have other job choices, such as in services, he added.

At present, there are 92 garment factories operating in Laos, six fewer than 2014, of which 60 are producing clothing for export.

Of the exporters 12 are solely owned by Lao nationals, 10 are joint ventures, and 38 are foreign owned, Dr Xaybandith said.

The value of garment exports in 2015 amounted to about US$174.2 million, a drop of 7.25 percent compared to 2014.

Most products are exported to the European Union, USA, Canada, Japan and some Asean countries.

To promote the sector, the association requires good cooperation from members and government agencies to formulate policies to attract workers to factories.

Despite the association having worked hard with its members and received support from the government, many aspects must improve to make the garment industry sustainable, Dr Xaybandith said.

He believes the ongoing economic growth in Laos, upturning fortunes in trading partners’ economies, and regional economic integration will benefit the industry.

“We will try to encourage manufacturing and garment businesses to become association members and attempt to attract new investors to this sector,” Dr Xaybandith said.

The association would also promote the supply of garments to the domestic market while reducing imports, and formulate policies and mechanisms to assist business operation amid increased competition, he added.